Kudlow: Obama's War on Investors, Capitalism

Mr. Pethokoukis,

You and your small band of "free marketeers" are the ones who give the Investor Class a bad name. Just like Medicare pilfering surgeons who'll operate on anything for a buck, there are are a small band of intellectually elite but morally depraved bankers and financiers who got us into this financial crisis (and most financial crises of the past). But unlike modern medicine, there isn't a proper system to discourage, prevent, and punish financial malpractice.

The fact is, just as in medicine, finance is not a world of equally capable free will. It is a complex, risk and uncertainty filled realm. And the fact is, the general public are either uninformed, misinformed, or at worst, simply unable to make the necessary decisions to ensure their financial health. And so, just as physicians must be bound to an ethical ideal that favors the public well being above their own wealth, so must a new ethical standard be raised in the world of finance. And like any set of standards, there must be a framework on which it stands, with legal teeth to ensure that the rogue money-milkers that you support with your writing don't get off easy.

So this is Obama's war -- it's a war against the corrupt few who destroy the well being of the many. Of course you'll fight it by trying to convince people that lassez-faire economics is somehow tied to our political origins in this nation and that it's all about the good of freedom against the evil of communism. But your arguments are old, stale, and now, everyone knows that you're lying. Like Governor Jindal, you think you can use the public's ignorance to stuff your methods down their throats and win a few more years of public exploitation to fill your coffers. But what you didn't anticipate, is that what the public lacks in ability, they make up for in anger. Anger at where your methods have gotten them. Anger at your support for financial malpractice.

Sick of Financial Malpractice of NH 1:42PM March 01, 2009

1) calling an argument "specious" does not make it "specious" as for your other point I honestly do not see the connection. I repeat cap gains are being returned to 20% which 5% (or actually 20%) below the pre 2001 rate. Why this should tramuatize investor (I am one btw) is beyond me.

2) re the IRA etc., to my knowledge Obama is not proposing anyting to diminish those plans in fact he is using a "nudge" to make 401K withholding the default choice instead of the default being no witholding

3)am well aware of the fwd looking component of the mkt, but nothing Obama is proposing is new. He campaigned on the cap gain/the expiration of the Bush tax cut for wealthy etc. To argue that the mkt is down 26% because of Obama is shaky given all of the other variables in play (e.g. cratering earnings, growing credit problems, the shattering of international trade and demand etc.). I believe the mkt is still overvalued (earnings etc.), an argument could be made only the Obama effect is keeping it at this level.

4) Obama and Geithner if anything are being criticized for coddling the bankers, some Republicans have appeared more comfortable with nationalization than Obama. I agree whining about bankers is not the answer.

5)Health care has attributes very different from cell phones and most other products. One cannot (and should not) go the corner and ask for bids treating a heart attack. This is gets complicated quickly but needless to say transaction costs, asymmetrical information etc. complicate matters. And remember your health cost is someone else's revenue/profit which means vested interests including many in the private sector will fight like heck to protect their profits.

6) the Gallup poll to which I refer is this one which shows Obama's approval spiking back up with Republicans post his address Tuesday (Mr. Peth had run a gleeful post the other day pre speech with the one you cited).

http://www.gallup.com/poll/116224/Obama-Approval-Rating-Increases.aspx

Regardless thx for the dialogue, we may differ but dialogue beats the BLAH!!! he is a commie stuff.

thx.

concerned reader of pethmeth of IL 7:11PM February 28, 2009

i have fought my whole life to build a small business. What started with one person now has seven. I offer good paying jobs, and consider myself an entrepeneur. I earn $325,000 a year. While many would say that is rich, consider that i have three children in college (over $100,000 year in tuition). I drive an old car and live a modest life. Now all that i have fought for is under assault by the President. Why should i pay the same rate for taxes earning $325,000 as someone earning $325 million dollars? Why should anyone, in these tough times, pay more taxes at all? Mr. President, i will be laying off one of my workers this year to prepare for your tax increases on me and my business of over $30,000 more a year. This is what you are doing - you are going to force people like me to decide between our families and our workers, and in this case, my family must come first. I will be adding one to your ranks of the unemployed.

Francis of CT 1:02PM February 28, 2009

Even Kudlow the great lacks focus on this total mistake which is causing a great deal of the write downs and true calamity we are facing. At least he should be pounding the table as we all should. Mark to market is accounting at its worst. Most banks and corporations should value their assets on how they cash flow as opposed to how some other bank sells a similar asset under the hammer (a desperate seller). It reminds me of years back when we were all worried about good will on balance sheets. I know of a company near bankruptcy with assets on their books which have been written down to cause that near backruptcy and the assets are cash flowing like clockwork. Total nonsense. Keep your eye on cash flow. Just like smart investors didn't worry about good will but watched the cash flow statement like a hawk.

If someone can give me a good reason for mark to market accounting I would like to hear it or read it. I feel like I am Alice in wonderland.

Here's a simple example ...you purchase a McDonalds franchise for 10M. The store has 1M is cooking equipment and real estate. So the BS has 9M in good will on the BS.

Yet the franchise throws off 3M in cash. What is the goodwill worth? Well it is worth

whatever you are willing to pay for the 3M cash flow stream. NOT what a failed store in a different location gets for its franchise.

Or am I missing something I am not an accountant (thank goodness) just an old CEO

who used corporate jets to extent my reach and handle problems dear Mr. President. It was a tool for me, maybe you ought to scrap Air Force 1. I am beginning to feel

the beginnings of real concern and I had such high hopes for you. JJ

nspart of NM 10:13AM February 28, 2009